Obama on JPMorgan debacle: ‘This is why we passed Wall Street reform’

When JPMorgan Chase sheepishly announced last week that it had taken a $2 billion loss on risky derivatives trading, it underlined the fact that nearly four years after a crisis that nearly toppled the global financial system, we still haven’t done nearly enough to make sure it can’t happen again.

“JPMorgan is one of the best-managed banks there is,” President Obama declared on ABC’s The View, in footage that aired Monday evening. “Jamie Dimon, the head of it, is one of the smartest bankers we’ve got, and they still lost $2 billion … This is why we passed Wall Street reform.”

But has Wall Street reform solved the problem? “There’s nothing to stop Jamie Dimon and JPMorgan Chase from going right back down the same road and doing this all over again tomorrow,” Ed Schultz noted on The Ed Show Monday night. “Because it’s perfectly legal.”

Wasn’t the financial reform legislation of 2010 – better known as the Dodd-Frank law – supposed to end this kind of hazardous trading?

Bart Chilton, Commodity Futures Trading Commission explained on The Ed Show that the problem is that many of the law’s specific regulations haven’t yet been drawn up – a task that falls to the Securities and Exchange Commission and other regulatory agencies.

“We need to put the meat on the bones of Dodd-Frank,” Chilton said. ”They passed the law two years ago, but two thirds of the regulations aren’t even in place. Regulators didn’t even have a view of what it was. That needs to change.”

Chilton outlined one of the most important provisions in Dodd-Frank that he said regulators should be focusing on – the Volcker Rule, which bans banks from making bets with their own money. He said that until that rule is fully drafted and enforced, banks will continue to be able to place massive, risky bets with their customers’ money - just as they did in the lead-up to the financial crisis – without breaking the law.

“Right now,” said Chilton, “there’s a troublesome duplexity within the banking system. They’ve got their own interest – their bottom line – and their customers’. We know who’s always gonna win out.”

Of course, not everyone thinks we need to monitor the financial industry more closely. Asked in a recent interview whether the JPMorgan debacle means we need more or less financial regulation, Reince Priebus, the chair of the Republican National Committee replied: “I think we need less.”